Kennedy Introduces Measures To Cut Layoffs From Mergers

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Senator Edward M. Kennedy introduced tax legislation today intended to discourage layoffs resulting from corporate mergers, as part of a package of proposals designed to help workers.

The bill would disallow tax deductions for interest paid to finance mergers and acquisitions. "In the 1980's it was commonplace for financiers to borrow the funds to make the acquisition with the express intent of selling off the assets and casting off the workers to raise the money to pay back the debt," Mr. Kennedy, a Massachusetts Democrat, said.

The bill also sought to broaden antitrust laws so that when a potential merger was challenged in court, the judge would have to consider not only its effect on competition but also "the interests of workers and local communities." It would require that when stock buyers notify the Securities and Exchange Commission of acquisition of major blocks of stock, they must also notify it of plans for layoffs and shutdowns that could result from the acquisition.

Stressing the themes that Congressional Democrats hope President Clinton will emphasize in this year's campaign, Mr. Kennedy told the Senate, "The 'quiet depression' facing American workers is the central economic, social and political issue of 1996. When the economy is wrong, nothing else is right."

The measure would also establish tax breaks and preferences in Government contracts for companies with above-average records of wage increases, investment in training and education for workers along with health care, retirement benefits, profit sharing, as well as provision of child care for all employees by companies with more than 500 workers.

Mr. Kennedy also proposed establishing an individual pension program so workers in companies not providing pensions could put up to $9,500 of their own money into portable pensions that would be operated by groups like chambers of commerce. The only burden on employers, he said, would be to require them to deduct a worker's pension payment from the pay.

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Mr. Kennedy conceded that Republicans were unlikely to hold hearings on his proposals, let alone bring them to the floor. But he said the tax and pension plans would be offered as amendments if any tax legislation came before the Senate. The antitrust plan, he said, would be proposed as an amendment to unrelated legislation this year.

Senate Republicans then underscored their unwillingness to deal with Democrats on work issues by insisting that no amendment to increase the hourly minimum wage to $5.15 from $4.25 by July 4, 1997, be offered today.

Unless Democrats agreed to put that issue aside at today's session, Republicans said, they would refuse to take up the illegal immigration bill and instead spend the day in meaningless roll-calls.

The most complicated provision of Mr. Kennedy's bill concerned worker-friendly companies, and it was drafted in hopes of encouraging support by stockholders. Qualifying companies would be allowed to deduct from their taxable profits 25 percent of dividends paid to stockholders. They would also be able to win Federal contracts if their bids were no more than 10 percent above the low bid.

Companies would qualify by certifying to the Labor Department that they met or exceeded the bill's standards, including putting 8 percent of payroll into employee health care, 8 percent into retirement benefits and 2 percent into education and job training.

A version of this article appears in print on April 16, 1996, on Page A00018 of the National edition with the headline: Kennedy Introduces Measures To Cut Layoffs From Mergers. Order Reprints|Today's Paper|Subscribe